Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington and Wisconsin; Modification of Assessment Rate, 81425-81427 [2020-27563]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 85, Number 242 (Wednesday, December 16, 2020)]
[Proposed Rules]
[Pages 81425-81427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27563]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 85, No. 242 / Wednesday, December 16, 2020 / 
Proposed Rules

[[Page 81425]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Doc. No. AMS-SC-20-0079; SC20-930-4 PR]


Tart Cherries Grown in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington and Wisconsin; Modification of 
Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement a recommendation from the 
Cherry Industry Administrative Board (Board) to decrease the portion of 
assessments allocated to research and promotion activities and increase 
the portion allocated to administrative expenses. The overall 
assessment rate would remain unchanged. The proposed assessment rate 
would remain in effect indefinitely unless modified, suspended, or 
terminated.

DATES: Comments must be received by January 15, 2021.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Marketing Order and Agreement Division, Specialty Crops Program, 
AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or internet: https://www.regulations.gov. Comments should reference the document number and 
the date and page number of this issue of the Federal Register and will 
be available for public inspection in the Office of the Docket Clerk 
during regular business hours, or can be viewed at: https://www.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Thomas Nalepa, Marketing Specialist, 
or Christian D. Nissen, Regional Director, Southeast Marketing Field 
Office, Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA; Telephone: (863) 324-3375, Fax: (863) 291-8614, or 
Email: [email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW, STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202) 720-8938, or Email: [email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
proposes an amendment to regulations issued to carry out a marketing 
order as defined in 7 CFR 900.2(j). This proposed rule is issued under 
Marketing Agreement and Order No. 930, both as amended (7 CFR part 
930), regulating the handling of tart cherries produced in the States 
of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and 
Wisconsin. Part 930 (referred to as the ``Order'') is effective under 
the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 
601-674), hereinafter referred to as the ``Act.'' The Board locally 
administers the Order and is comprised of producers and handlers of 
tart cherries operating within the production area, and a public 
member.
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 13563 and 13175. This proposed 
rule falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this proposed rule does not meet the definition 
of a significant regulatory action, it does not trigger the 
requirements contained in Executive Order 13771. See OMB's Memorandum 
titled ``Interim Guidance Implementing Section 2 of the Executive Order 
of January 30, 2017, titled `Reducing Regulation and Controlling 
Regulatory Costs' '' (February 2, 2017).
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the Order now in effect, tart cherry 
handlers are subject to assessments. Funds to administer the Order are 
derived from such assessments. It is intended that the assessment rate 
would be applicable to all assessable tart cherries for the 2020-21 
crop year and continue until amended, suspended, or terminated.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. Such 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This proposed rule would decrease the portion of the assessment 
rate allocated to research and promotion activities from $0.005 to 
$0.00275 per pound of tart cherries and increase the portion allocated 
to administrative expenses from $0.00075 to $0.003 per pound of tart 
cherries. The overall assessment rate established for the Board for the 
2020-21 and subsequent fiscal periods would remain unchanged at 
$0.00575 per pound of tart cherries.
    The Order provides authority for the Board, with the approval of 
USDA, to formulate an annual budget of expenses and collect assessments 
from handlers to administer the program. The members are familiar with 
the Board's needs and with the costs of goods and services in their 
local areas and are thus in a position to formulate an appropriate 
budget and assessment rate. The assessment rate is formulated and 
discussed in a public meeting. Thus, all directly affected persons have 
an opportunity to participate and provide input.

[[Page 81426]]

    For the 2019-20 fiscal period, the Board recommended, and USDA 
approved, an assessment rate of $0.00575 per pound of tart cherries 
that would continue in effect from fiscal period to fiscal period 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the Committee or other information 
available to USDA.
    During the September 10, 2020 meeting, the Board recommended 2020-
21 expenditures of $795,000 and an assessment rate of $0.00575 per 
pound of tart cherries. In comparison, last year's budgeted 
expenditures were $1,956,500. The total assessment rate remains 
unchanged by this action. However, this proposed rule would decrease 
the portion of the assessment rate allocated to research and promotion 
activities from $0.005 to $0.00275 per pound of tart cherries and 
increase the portion allocated to administrative expenses from $0.00075 
to $0.003 per pound of tart cherries. This shift in allocation would 
allow the Board to fund its administrative obligations while continuing 
limited research and promotion activities to help market this season's 
below-average crop. The revised allocation would ensure the 
availability of adequate administrative funds despite a significant 
draw-down in reserves resulting from the 2019-20 crop year assessment 
rate reduction.
    The major expenditures recommended by the Board for the 2020-21 
year include $350,000 for research and promotion, $255,000 for salaries 
and wages, and $130,000 for other administrative expenses. Budgeted 
expenses for these items in 2019-2020 were $1,514,500, $250,000, and 
$130,000, respectively.
    The Board derived the recommended assessment rate by considering 
anticipated administrative expenses, an estimated crop of 141.46 
million pounds of tart cherries (down from last year's production of 
236.3 million pounds), the current status of reserves, and the needs of 
the industry with regards to research and promotion activities. Income 
derived from handler assessments is calculated at $813,395 (141.46 
million pounds x $0.00575/pound). The Board anticipates that due to 
approved exemptions and loss adjustments the actual income from 
assessments will be closer to $783,992. Assessment income, along with 
interest income and funds from the Board's authorized reserve, would be 
adequate to cover budgeted expenses of $795,000. Funds in the reserve 
are estimated to be $75,096 at the end of the 2020-21 fiscal year.
    The assessment rate proposed in this rule would continue in effect 
indefinitely unless modified, suspended, or terminated by USDA upon 
recommendation and information submitted by the Board or other 
available information.
    Although this assessment rate would be in effect for an indefinite 
period, the Board will continue to meet prior to or during each fiscal 
period to recommend a budget of expenses and consider recommendations 
for modification of the assessment rate. The dates and times of Board 
meetings are available from the Board or USDA. Board meetings are open 
to the public and interested persons may express their views at these 
meetings. USDA would evaluate Board recommendations and other available 
information to determine whether modification of the assessment rate is 
needed. Further rulemaking would be undertaken as necessary. The 
Board's 2020-21 budget and those for subsequent fiscal periods will be 
reviewed and, as appropriate, approved by USDA.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this proposed rule on small 
entities. Accordingly, AMS has prepared this initial regulatory 
flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 400 producers of tart cherries in the 
regulated area and approximately 40 handlers of tart cherries who are 
subject to regulation under the Order. Small agricultural producers are 
defined by the Small Business Administration (SBA) as those having 
annual receipts of less than $1,000,000, and small agricultural service 
firms have been defined as those whose annual receipts are less than 
$30,000,000 (13 CFR 121.201).
    According to the National Agricultural Statistics Service (NASS) 
and Board data, the average annual grower price for tart cherries 
during the 2019-20 season was approximately $0.15 per pound. With total 
utilization at 236.3 million pounds, the total 2019-20 crop value is 
estimated at $35.45 million. Dividing the crop value by the estimated 
number of producers (400) yields an estimated average receipt per 
producer of $88,613. This is well below the SBA threshold for small 
producers.
    A free on board (FOB) price of $0.82 per pound for processed tart 
cherries was derived from USDA's 2020 purchases of dried tart cherries 
at an average price of $4.11 per pound. The dried cherry price was 
converted to a raw product equivalent price at an industry recognized 
ratio of five to one. Based on utilization, this price represents a 
good estimate of the price for processed cherries. Multiplying this FOB 
price by total utilization of 236.3 million pounds results in an 
estimated handler-level tart cherry value of $193.8 million. Dividing 
this figure by the number of handlers (40) yields estimated average 
annual handler receipts of $4.8 million, which is below the SBA 
threshold for small agricultural service firms. Assuming a normal 
distribution, the majority of producers and handlers of tart cherries 
may be classified as small entities.
    This proposal would decrease the portion of the assessment rate 
allocated to research and promotion activities from $0.005 to $0.00275 
per pound of tart cherries and increase the portion allocated to 
administrative expenses from $0.00075 to $0.003 per pound of tart 
cherries. The overall assessment rate established for the Board for the 
2019-20 and subsequent fiscal periods would remain unchanged at 
$0.00575 per pound of tart cherries. The volume of assessable tart 
cherries for the 2020-21 season is estimated at 141.46 million pounds. 
Thus, the $0.00575 rate should provide $813,395 in assessment income 
(141.46 million pounds x $0.00575/pound). The Board anticipates that 
due to approved exemptions and loss adjustments the total income from 
assessments will be $783,992. Income derived from handler assessments, 
along with interest income and funds from the Board's authorized 
reserve, would be adequate to cover budgeted expenses.
    The major expenditures recommended by the Board for the 2020-21 
year include $350,000 for Research and promotion, $255,000 for salaries 
and wages, and $130,000 for other administrative expenses. Budgeted 
expenses for these items in 2019-20 were $1,514,500, $250,000, and 
$130,000, respectively.
    This proposed rule would shift the allocation of the assessment 
rate to decrease the portion allotted for research and promotion, while 
increasing the amount allocated for administrative costs. This 
adjustment

[[Page 81427]]

would provide enough funds for the Board's administrative obligations 
and decrease the funding for research and promotion activities to 
reflect the significant reduction in the 2020-21 crop.
    Prior to arriving at this budget and assessment rate, the Board 
considered production history, crop estimates, its financial 
statements, and the need to meet its administrative obligations and 
maintain some marketing efforts to increase demand for tart cherries. 
The Board discussed alternatives, including raising the assessment rate 
and borrowing funds; however, they were rejected due to the burden of 
increasing assessments on handlers and the cost of debt due to 
financing. The Board determined that 2020-21 expenditures of $795,000 
were appropriate, and the recommended assessment rate and allocation, 
along with funds from interest income, and funds from reserves, would 
be adequate to cover the budgeted expenses.
    A review of historical information and preliminary information 
pertaining to the upcoming fiscal year indicates that the average 
grower price for the 2020-21 season should be approximately $0.19 per 
pound of tart cherries. According to NASS statistics, this price is the 
average of the past three years. Therefore, the estimated assessment 
revenue for the 2020-21 crop year as a percentage of total grower 
revenue would be approximately 3.0 percent.
    This proposed rule would not increase the assessment obligation 
imposed on handlers. Assessments are applied uniformly on all handlers, 
and some of the costs may be passed on to producers. However, these 
costs would be offset by the benefits derived by the operation of the 
marketing order.
    The Board's meeting was widely publicized throughout the tart 
cherry industry. All interested persons were invited to attend the 
meeting and participate in Board deliberations on all issues. Like all 
Board meetings, the September 10, 2020, meeting was a public meeting, 
and all entities, both large and small, were able to express views on 
this issue. Finally, interested persons are invited to submit comments 
on this proposed rule, including the regulatory and informational 
impacts of this action on small businesses.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Order's information collection requirements have been 
previously approved by the OMB and assigned OMB No. 0581-0177, Tart 
Cherries Grown in the States of Michigan, New York, Pennsylvania, 
Oregon, Utah, Washington, and Wisconsin. No changes in those 
requirements would be necessary as a result of this proposed rule. 
Should any changes become necessary, they would be submitted to OMB for 
approval.
    This proposed rule would not impose any additional reporting or 
recordkeeping requirements on either small or large tart cherry 
handlers. As with all Federal marketing order programs, reports and 
forms are periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    AMS is committed to complying with the E-Government Act, to promote 
the use of the internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this proposed rule.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: 
https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any 
questions about the compliance guide should be sent to Richard Lower at 
the previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposed rule.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Reporting and recordkeeping requirements, 
Tart cherries.

    For the reasons set forth in the preamble, 7 CFR part 930 is 
proposed to be amended as follows:

PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK, 
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN

0
1. The authority citation for 7 CFR part 930 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

0
2. Section 930.200 is revised to read as follows:


Sec.  930.200   Assessment rate.

    On and after October 1, 2020, the assessment rate imposed on 
handlers shall be $0.00575 per pound of tart cherries grown in the 
production area and utilized in the production of tart cherry products. 
Included in this rate is $0.00275 per pound of tart cherries to cover 
the cost of the research and promotion program and $0.003 per pound of 
tart cherries to cover administrative expenses.


Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2020-27563 Filed 12-15-20; 8:45 am]
BILLING CODE P